Ceasefire hopes spark best day on Wall Street since May 2025

US President Donald Trump said yesterday he expects to end the war on Iran within two to three weeks, telling reporters at the White House that the US had largely accomplished its military goals and that Iran would not obtain nuclear weapons. Trump indicated a formal agreement with Tehran was not necessary for withdrawal, adding that countries reliant on the Strait of Hormuz should take responsibility for reopening it themselves.

US job openings fell to 6.88mn in February, down from an upwardly revised 7.24mn in January, while the hiring rate dropped to its lowest level since April 2020. Pullbacks were concentrated in construction, leisure and hospitality, and business services. The quits rate declined to 1.9%, matching its lowest since 2020, and the ratio of vacancies to unemployed workers eased to 0.9, reinforcing the Fed's view that the labour market is not a source of inflationary pressure.

Eurozone inflation rose to 2.5% y/y in March from 1.9% in February, the highest since January 2025, driven by energy prices swinging to +4.9% y/y from -3.1% the prior month. Core inflation unexpectedly slowed to 2.3%. The print breaches the ECB's 2% target and markets are now pricing almost three full 25bps hikes by year-end, with the April 30 meeting carrying a 47.5% probability of the first rate hike.

Today's Economic Data and Events

12:00 Eurozone S&P Global Manufacturing PMI, March F. Forecast: 51.4

12:00 Eurozone unemployment rate, Feb Forecast: 6.1%

16:15 US ADP employment change, March. Forecast: 40k

16:30 US retail sales advance, February. Forecast: 0.5% m/m

18:00 US ISM Manufacturing, March. Forecast: 52.3

Fixed Income

US Treasuries rallied on Tuesday as ceasefire optimism reduced the near-term risk premium that has built up since the conflict began. Yields on the 2yr UST fell 3.5bps to 3.7930%, while the 10yr was down 3.2bps at 4.3166%.

FX

The dollar index closed down 0.55% at 99.961 on Tuesday, retreating from a fresh year-to-date high hit earlier in the session as ceasefire optimism improved risk appetite.

EURUSD closed higher 0.77% at 1.1553 while GBPUSD ended the day up 0.31% at 1.3227. USDJPY declined 0.62% to 158.75.

Among emerging market currencies, USDINR closed almost flat 94.8325. USDEGP closed down 0.1% at 54.58. USDTRY ended the day flat at 44.4587.

Equities

Global equity markets had their best session since May as ceasefire optimism fuelled a broad risk-on rally. In the US, the S&P 500 added 2.9%, the Dow Jones gained 2.5%, and the NASDAQ surged 3.8%, with technology stocks leading the advance. Despite the strong close, all three indices finished Q1 with material losses, with the S&P 500 posting its worst quarter since 2022 as the Iran conflict and the repricing of Fed rate expectations weighed on valuations through the period.

European markets also closed higher, with the DAX, EuroStoxx 50, and the FTSE 100 all rising 0.5%

Locally, DFM closed down 0.15% while ADX closed almost flat. Saudi Arabia's Tadawul rose 0.7%.

Commodities

Brent fell 3.0% on Tuesday to close at USD 103.97/b as ceasefire optimism prompted an unwind of the geopolitical risk premium. WTI fell 1.46% to USD 101.38/b. Both benchmarks are trading higher this morning, with Brent at USD 105.22/b and WTI at USD 103.26/b, as Iranian pushback on the prospect of imminent talks tempered the previous session's optimism.

Gold closed up 3.48% on Tuesday to USD 4,668.06/troy oz. Silver outperformed sharply, gaining 7.26% to close at USD 75.17/troy oz.